[March 27, 2014](Reuters) — A federal data-sharing
system meant to prevent healthcare providers banned from one state's
Medicaid program from billing another state's program isn't working as
intended, according to the U.S. Department of Health and Human Services
Office of the Inspector General.

Two years after its creation, the data-sharing system contained no
records from 17 states or the District of Columbia of doctors,
nurses or other healthcare providers who had been "terminated," or
banned from billing Medicaid, for fraud or other offenses, the
independent auditor said in a report to be released Thursday.

Reuters reviewed a copy of the report in advance of its release.

The report also said that the Centers for Medicare and Medicaid
Services (CMS), the federal agency that maintains the data-sharing
system, made no effort to require states to report banned providers,
though it is legally empowered to do so, and that when states did
report them, the data was often unreliable or incomplete.

CMS started operating the Medicaid and Children's Health Insurance
Program State Information Sharing System in 2011, as required by the
Affordable Care Act. State Medicaid administrators are encouraged to
report to the database medical providers who have been convicted of
major crimes, have lost their medical license or were otherwise
disciplined. They can then use the system to identify providers in
their own Medicaid program who were terminated in other states.

"Our findings suggest that CMS's process for sharing information on
terminated providers needs improvement to make it more useful to
State Medicaid agencies in identifying providers that must be
terminated pursuant to Federal law," the report said.

The report did not provide any estimates of the number of providers
banned in at least one state but still billing in another.

According to the inspector general's office, the data-sharing system
did not contain a report of a banned provider from the following
states as of June 2013: Colorado, Hawaii, Kentucky, Minnesota,
Montana, New Hampshire, New Mexico, North Carolina, North Dakota,
Oklahoma, Oregon, South Carolina, South Dakota, Texas, Utah, West
Virginia and Wyoming. There also were no reports from the District
of Columbia.

A majority of these states are expanding Medicaid under the
Affordable Care Act, according to the Kaiser Family Foundation. Some
of these states may have reported providers who were terminated from
Medicaid and then reinstated.

The auditors found a small number of banned provider reports from
most states. Four states — California, Pennsylvania, Illinois and
New York — accounted for 72 percent of all records submitted.
Louisiana submitted only one terminated provider in 2011.
Massachusetts submitted two. Virginia submitted nine.

In a January 17 letter to the inspector general's office responding
to the auditor's findings, CMS administrator Marilyn Tavenner
acknowledged that the agency can require states to report terminated
providers to the system. In the letter, which was included in the
auditor's report, Tavenner said CMS would explore options to
implement mandatory state reporting. Tavenner did not provide a
timeline.

The reported information was often not useful in helping other
states identify banned providers.

More than half of the 6,439 records submitted did not include a
National Provider Identification number, which is critical to any
state trying to identify a terminated provider, according to the
inspector general's office. The Affordable Care Act requires that
the CMS data system track provider numbers, but the auditor found
that CMS made the provider number optional in the submissions form.
The inspector general's office also said some of the reported
provider numbers were incorrect.

The auditor found that one-third of providers in the database had
not been terminated, but had died, retired, left the state or
stopped working with Medicaid of their own accord. One-fourth of the
records lacked a provider address, and one-third lacked a provider
specialty.

CMS has since begun requiring that states submit termination letters
for each provider entered in the shared data system and that CMS
employees review each letter to ensure the provider belongs in the
system, Tavenner said in her letter.